o choose from. careful, though -- that kind of power can go to your head. that explains a lot. yo, buddy! i got this. gimme one, gimme one, gimme one! the power of the "name your price" tool. only from progressive. stock of the day by express does sell men's clothing. i see they sell sweaters. so it's men and women. the company raising its fourth quarter earnings well above consensus. holiday sales were better than they had previously thought.

guys, thanks. gentlemen, thank you. >> thank you. >> good to be here. >> good to see you both. >> becky, thank you. make sure you join us tomorrow. "squawk on the street" starts right now. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer and david faber here at the new york stock exchange. retail sales out about 30 minutes ago, up half a percent in december. europe also fighting off the blues this morning, as germany has some lower than expected estimates, fourth quarter gdp. our road map begins with a warning this morning from fitch. that the u.s. could lose its top credit rating again if there's a delay in raising the debt ceiling. fitch said the pressure on the aaa is, if anything, increasing. we are four hours away from facebook's secret announcement in menlo park.

so far, the guesses range from a facebook search engine to a facebook phone. would either product help lift the stock back with a high water mark. the debate kicks off whether dell can, a, raise the money to go private, and b, reinvent itself without going through cash flow. the journal said the talks have been serious for weeks. lululemon doing a downward dog this morning. raises guidance but not enough to impress investors. the battle over the debt ceiling has warranted a warning from fitch. they said it will prompt a formal review of u.s. credit ratings. fitch does add it expects congress will ultimately approve a ceiling increase. the head of global sovereign ratings for fitch, david riley, will join us in the next hour. bernanke weighing in on the debt ceiling in michigan late yesterday. >> raising the debt ceiling, which congress has to do periodically, gives the government the ability to pay its existing bills.

it doesn't create new deficits, it doesn't create new spending. so not raising the debt ceiling is sort of like a family which is trying to improve its credit rating saying, i know how we can save money, we won't pay our credit card bills. not the most effective way to improve your credit rating. >> the metaphors, jim, whether it's a family not paying the credit card bills, the president saying it's like dining and dashing at a restaurant, the only thing is we've got two weeks of respite and then we're off to the races again. >> after the civil war, there was tremendous partisanship in this country. a tumultuous time. the level of bipartisanship. there's such hatred that you can't get in a room. it never seems like obama gets in the room. biden got in the room beforehand. but look, everybody hates each other down there. it's exactly the opposite of what you would expect from a respected nation.

it makes us look mickey mouse. i don't blame fitch. look, we have to pay bills, the constitution says it, but everybody doesn't seem to care much about the constitution right now. >> i thought yesterday at the president's news conference, i thought the partisanship was at an all-time high in regards to the fiscal cliff debate. they, referring to republicans in congress, they can either acts responsibly and pay america's bills or act irresponsibly and put america through another economic crisis. it feels a little bit worse, markets sort of shrugged that off. that was good news in all this. but it seems like the dividing line is real firm and real deep between republicans and democrats at this point. >> i wonder whether we know anything. one of the things that's gripped me is there was almost universal belief that dividend taxes were going to go up dramatically. even down to the last day of december. you come in, dividend taxes barely go up. i find that, like facebook, which we're going to talk about in a moment, we're not really privy to what's going on.

it kind of drives me crazy. we're in a democracy and you're supposed to know. but i do feel that when i look at spain, when i look at france, when i look at germany, i look at the united kingdom they do not get caught up in this kind of wrangling. they are better governed nations right now. >> that's easy to say, i guess, when your comparison seems to be what is a completely dysfunctional congress at this point. jim, how do you go about trying to gauge how to even play this? you look at what happened over the end of the year, the fiscal cliff. and at the end of the day you might take away, well, they did get something done and the markets reacted positively. look at the rally in the first week of the year. do you approach it the same way? it seems to be to a certain extent we're not ignoring it, but at least saying i'm not going to -- >> i don't want to own domestic companies as much as i want to own foreign companies. s.a.p. not included. i think some of that's america's shakeup there.

i think there are a lot of companies doing well. if you look to ppg's conference call yesterday, they're seeing a turn in asia. they're seeing europe getting better. so i want to be more oriented toward ppg and a little less toward target. >> ending a partnership with radio shack today. that's going to be another one to talk about today. >> people are looking for positive things to say about radio shack. i want to stay in front of the idea of what david's talking about, how do you play it. the answer is, you don't overreact. how about that. you don't overreact. >> do you think there's a scare tactic going on in washington saying, either you do this or you do this, and you put america through another economic crisis? is that real? should americans actually hear the president say another economic crisis, in 2008 comes to mind? >> the market did drop 19% then. but i think some of it is, okay, they fooled me once, they fooled me twice, i sold all my dividend

stocks. got out of my partnerships. they're not going to fool me again. i do think that in the end this is one of those situations where you know what's going to be resolved. they have to resolve it. we're not going to default. we're just -- mickey mouse as you may see, we're still a great nation. >> let's talk about facebook. it is set for widely touted media event at the california headquarters in just about four hours from now. no one's exactly sure what the company will announce, although speculation has ranged from a mobile phone to a new building. facebook shares are up 60% over the past three months. stock pulled back in yesterday's session. but what do you think it's going to be? >> i know that we were getting some chatter that -- look, there's a possibility that it's some new search. these guys, they remind me of steve jobs used to call these press conferences. and you say, you know ha he's going to do? he's going to unveil x and it

turns out to be 10x. is mark zuckerburg capable of that amount of surprise? i don't know. >> he actually came up with the goods. >> it's so exciting. >> i have no idea, all i know is they've got a lot of shareholders who are much happier than they were not long ago. one harkens back to the week when it went public. think of morgan stanley, the criticism that firm took as a result of that ipo. the ceo said give us a year, let's see where things stand. maybe he'll end up looking better. >> would you use a video messaging product on facebook if we got that? >> well, i wouldn't. >> are you on facebook? >> no, i am not. >> that would be a bainier. >> however, i'm sure many would. >> i think so. 1 billion users. >> some sort of a voiceover ip, skype, they would go there, microsoft bought skype, or at least had looked at it, would

they go down that road. i don't know. we'll see. >> they've done a good job of keeping the lid on it. nothing's leaked out. this has been out there for over a week. you've got a company with 9% of the u.s. mobile app market versus google's 57, leading you to a search engine theory. on the other hand, 70 million users in the u.s. every day logon on a phone to facebook. that leads some people to think maybe a facebook phone, regardless of what zuck has said in the past is not possible. >> maybe it is a steve jobs moment. maybe we literally can't fathom it. maybe they have something so special, we can't fathom it. i mean, you go, whoa, what is that thing? i don't need one of those. now 70 million people have them. >> this could be a massive -- >> but you wouldn't get short in front of it, would you, today? >> there's no reason -- facebook has good fundamentals. i think that you short ones that don't have the fundamentals.

i think their mobile solutions are really being adopted by the big advertisers who are trying so hard to get in front of an audience. if they're paying fortunes to be in front of the super bowl, you mentioned the other day, how many super bowls, that was thei sales pitch, they're very compelling. they make you feel like, holy cow, this is the new holy grail. simply because when you look at something on your phone, you do your best to not look at the ad. but they've got these solutions which are embedded. kind of clever. >> the good thing about delivering in terms of the steve jobs way of delivering 10x, when the stock hit the bottom, addressed mobile montization, that was a delivery of two times expected. maybe the bar is lower so you deliver two times and that's enough to juice the stock higher. >> he did say, listen, we were bad at something, but we're going to get good at something, and that's the sign of a good

executive. any growth, any growth, look, see, our company is making microprocessors, but we're also making these dynamic random access memory, and we're not even in the top ten semiconductors, we're done with that. we're going to make it so that this size device is more powerful than an ibm. bob reuss said that, one of the founders. it's kind of like, wow, maybe we've got some wowing going on. it can happen. >> we'll see. if they can recreate -- now, the conference call which you praised over and over again, was digging out of a hole. >> that was amazing. >> if they can recreate some of that magic in a positive sense today -- >> it's not that much. on the conference call he sounded like an adult ceo. that's not asking too much of any ceo. >> previous conference call they said how brilliant they were in mobile. and that was one of the conference calls if you remember sent the stock down. and you think it was only the

finkleweiss twins that this company could break out. let them go to the club and have their vacation. i prefer zuck. he became the z man. >> speaking of men, one company named after a man is dell, rising in the pre-market on top of yesterday's surge. the company held talks with silver lake partners about going private. weakness in the pc market has taken a toll obviously. david, it does raise the question, if you don't do pcs, what will you do and how do you make that transition even if you are private. >> it's a difficult one, especially if conceivably you're going to be crimping margins. this is possible, but unlikely is where i would come out on it at this point. possible, because when you do put the numbers down, you can't argue that it's not going to happen.

at the same time, the financing, the equity check that would be needed, even if you assume, as i do, that michael doug would roll in his 15% stake, still is a very big number. it's a very big number. maybe it's as low as $4 billion, but it's probably closer to $5 billion. that argues for two, if not three firms. perhaps even more. silver lake is not that large. you're talking about percentages of funds that would be devoted to dell. you might get the lps to participate directly. in other words, the private equity investors in the funds would actually step up for an individual investment in this deal. but there's a very high hurdle to getting something done. while we've had guests on our show from jpmorgan saying, we can get something done, come. it's likely to get done. but again, the interest rate that dell would pay, a company that there's a lot of questions about t would not be easy, per se. and so i do come back to the

equity check, the financing. we don't know how much cash they have overseas, how much would be able to be returned which could help the overall picture in terms of the enterprise value and lower the overall cost. you get into the complexities with michael dell dealing with private equity. we saw this in j. kru, the founder. you're not going to go after this company if you don't have the participation of michael dell. that keeps the potential sbresht in a certain area. >> why does jeffries say -- is it just idle? >> when you do the math on a $15 deal, you're talking $25.5 billion value, and you've got to take it down a bit because of the cash position. we don't know how much is overseas, and if you bring it back would get taxed significantly. but the numbers are significant in terms of the equity check. that is probably the largest gaining factor. maybe there are big pension funds that want to step up and own a lot of dell and would help out here. but private equity, listen, club

deals are frowned upon. two or more players getting involved in one deal. fighting charges of collusion on another matter. i have a hard time seeing it potentially happen. but it's not impossible. >> what's some angel we haven't thought of. i'm always thinking -- >> and overseas. >> maybe we're being too united states centric. there are billionaires galore overseas. >> there are. >> i haven't heard any of those names. then you have to come back to the economics of the business itself. you know better than i do. what kind of challenges are they facing. what could they expect next year and the year after. what is their market share going to look like. do you want to invest in a potentially declining cash flow stream. >> best buy was kicked around for a while. i just think when i look at dell, michael dell is a very motivated individual. when you talk with him, he is clearly, like listen, my company is worth a lot more now. he obviously missed mobile, all

right? he believed in the desktop. but at the same time, if europe turns, if asia turns, 50% of the business overseas -- >> they still need to do deals, they still need to invest in a competitive industry. and they're constrained somewhat by the capital of the company. it's cheaper, i suppose. they could return a lot of capital by levering up. >> obviously up again today, as we begin the first full day of discussing that story. lululemon up last year, but the street not impressed with the latest guidance. is blue lu lemon more of a lemon today. bill simon on everything from the state of retail and job creation to what new gun control regulations could mean to the sale of firearms.

shares of lululemon falling pre-market trade. it includes the holiday shopping season, but the forecast is still below street expectations. lululemon seems fourth-quarter

same-store sales down from 26% growth in the year-ago period. tough comparisons. it seems like a battleground stock, because people have come out this morning and saying, you know what, it's a buy on the weakness. others are saying, maybe don't touch it. >> credit suisse talking about productivity. most of the people want to use it as an opportunity to buy. this is what happens when you have a company that historically says we're going to do x, and then they do 20% better. and suddenly they say they're going to do x and they do a little bit better. and lulu said it's up from this fall. they need to start playing like everybody else. they need to say, here's what we need to do. the expectations here are just created by lulu historically. it ain't going to do it. >> it sounds like they're setting up for a pretty decent start to 2013. they're presenting at this icr retail conference in miami. they're entering 2013 in a clean

inventory position. they talked about the marketdowns in the holiday season. maybe the upside is you don't have much inventory going into 2013. gross margins are coming in slightly ahead of planned. so a little bit of a fact there. >> i know one of the big thesis there was the big overseas expansion. i come back and say this market doesn't like retail right here. the market is focused on the payroll, your check. the market is focused on kind of the rebuilding of sandy. lulu is like the wrong time to come out and saying we're not blowing it away. it all happened like sox like coors, not the beer, the -- kors goes down a bit. you don't look at -- a great manager says something good. you say, wow, if lulu can't do it, then this company can't do it and that company can't do it. we're kind of in a funk here. >> especially at the high end.

talking about how the high end is disproportionately at risk as these tax hikes come in. >> i haven't seen it yet. but ethan allen today, that the high end is at risk. everybody wants to believe that you look at the macro and you can't spend as much. it's refutablrefutable. they do have less. >> just a few minutes to go until the opening bell. we'll get some of cramer's advice with the "mad dash" when we come back. and david faber with an interview.

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time for the "mad dash," a few minutes before the opening bell on a tuesday. lennar making news here. >> who's perfect and what does the stock do. lennar, sales are down. you've got orders that are terrific. you've got gross margins that are expanding. if you had to craft what this market is like more than anything else in the world, it's what they've announced. and i think that's because the market is a little tired. wants to recharge. but there was nothing wrong with lennar. i think what people do is say, hey, you know what, that stock is down. let's find the problem with lennar. stewart miller, who his father, leonard miller, great home builder, the brilliance, this is

a perfect quarter and a perfect quarter is not enough. what does it say about the ones that aren't. >> if there is a problem to be ferreted, is it the mortgage ticking up? >> i think this's a sense that the clock is ticking on those low mortgage rates, that maybe we're not going to have the level of affordability. i think housing's multiple year, because we have such pent-up demand. but this market has said this -- remember, we had a great quarter here. the stock has sold off, it's been buys, not sell. >> fitch warning the u.s. the aaa rating could be in jeopardy if the debt ceiling standoff is not resolved. the opening bell just a few minutes away.

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♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching cnbc "squawk on the street" live from the financial capital in the world. we've not mentioned apple, guys. yet another firm coming out today. this time they're cutting their price target from 660 down to 530. weak trends on the iphone 5. prospective lower gross margins.

they say there's downside risk to 400. >> jeffries comes out today and says, that quarter's going to be better than expected. you've got to get involved. this is one that has become such a battle ground, that i want to tell people, listen, i actually live in albany. i do not live where i -- where you think i did. my address is very different from what you think it is. because i said something negative about apple last night. and you're not allowed to do that. do they post other addresses? this has become the story. which is not good. you want all the colt players out. you don't want jim jones or kool-aid. >> i'm there with jim. >> thank you. >> jonestown. when i saw that piece, i thought, oh, my -- >> it didn't end well. >> it didn't end well, no. that's a good point.

[ bell ringing ] >> there's the opening bell. the s&p 500 topping the screen at the big board. united states commodity funds celebrating the launch of the united states agriculture index fund. and the relaunch of hsn.com. >> 497 and change on apple. price target decrease. we should see the analysis of who owns apple at this point. they found that the number of mutual funds holding apple declined in terms of growth funds. maybe no longer a growth stock as much. that's actually gone down. now to 40% of value funds from 29% of value funds from december 12th, to december 2011. >> i was at jim cramer on twitter very early this morning, just to be able to -- because of

the heat-seeking missile. people were attacking my daughter for not liking itunes. they were like, well, if your daughter knew how to use itunes. it's not that bad, she just didn't like the product. the emotions are unbelievable. >> on the way up, it was an incredible growth story, with ever-increasing growth rates. now it seems to be the reverse. and here we go. >> the competitor samsung, i keep thinking about the european trip, and you saw samsung there. >> i did. i got a lot of tweets on that, too, saying, you know, come on. >> you're breaking -- >> they have iphones over there, too. >> on "usa today," in front of the business section, all about apple losing their cool again. samsung, meantime, crossing in the 100 million unit mark in the galaxy. >> do you also throw out the suppliers with this, with the momentum downward?

do you throw out the names like broadcom and qualcomm, which is both on android and apple? if apple is losing handsets to samsung, broadcom would pick that up. >> everything's so tainted. qualcomm, 4g, 5g, doesn't matter, you're going to need their chips. arm holdings downgraded today. the apple complex, which was so great when momentum was terrific, is, of course, in reverse momentum. i think people don't know what to do. there's a lot of people who came in to apple between 500 and 700, because i think many things seem like they're going great. and they don't know what to do, other than criticize people who wonder whether it's as great as it used to be. >> arm holdings, by the way, down 4.5% on that downgrade, speaking of apple related stocks. >> they need to buy and get their mojo back.

>> second big downgrade in two days, after goldman yesterday talking about near term hurdles, and high end consumers, disproportionately at risk year over year spending comps will be increased. it does raise larger issues. you look at the tiff fanny news a couple of weeks ago, right? is that starting to add up? >> i don't know, did they listen to the conference call? specifically they're saying that's not the case. everyone has to put caution in. the high-end consumer did well in that conference call. there are a series of downgrades today, every day, which is valuation, val you wapgs. it's almost as if they looked at the charts, where stocks have come and they're saying, stocks aren't worth en masse what people are paying for them. and look, that's -- if we break to new highs, these people -- i don't know, what are they going to do? how do they come back on the american express train? does anyone -- there is a risk to downgrading. you've seen it. and to think of the breakout

moves, i really date myself, the '84 to '86 move was accomplished when everybody was saying, look, stocks don't trade, the dow can't go to 3,000. when the dow went to 6,000, the federal reserve said this is irrational exuberance. and then it went to 10,000. and everybody got out. and they kept coming back. >> then it went back to 6,000 and then it went back up. >> i just think, what happens if these stocks break out? people could say, jim, this time is different. it can't be that way. but it's been different at several points in my career where everybody felt the valuations make no sense. of course, the issue is, the stocks have -- we need great earnings to continue. i mean, they can't go up in earnings peak. that doesn't work. in that case, the bears are right. >> we should point out, shares of dell up another 2.5% this morning after yesterday's story broken by bloomberg, confirmed by the journal, adding more detail potentially to private

equity firms in talks with the company about a go private transaction. the hurdles for which are fairly large in terms of the size of the equity. we do have very deep markets right now for high yield bonds, and for bank debt as well. we'll see. i should point out, we don't talk as often about the bonds. the credit default swaps for dell yesterday traded dramatically higher. why? because, of course, if they were successful in going private, they would add enormous amounts of debt to the balance sheet and the creditworthiness of dell would go down. >> hewlett-packard went to 17, and there was kind of a sense it was right, there had been a couple of notes saying the break-up of dell was not that great. a lot of these stocks have fallen dramatically, all of a sudden picked up some froth. i would point out people who know michael dell, he has

periodically said, the heck with it, i'm going private. and the heck with it i'm going private has created a momentum in itself. >> that may be an emotional response. but when you get down to the actual numbers themselves, in trying to figure that out, not to mention a special committee that would need to be formed, and where you put yourself if you're michael dell, and making sure the minority or other shareholders are not impacted by your decisions, it gets complicated. hewlett-packard, by the way, up 17% so far this year. that's down today. best performer on the dow. >> down day. we've got a day where -- geez, apple is at 492. >> we're going to talk to bill simon later on. a couple things. beginning memorial day, walmart will offer any job to any honorably discharged veteran. and increasing the amount they'll source from the u.s., people saying this is a pretty sophisticated and savvy pr play,

which we'll obviously talk about more later on. >> i believe there's another leg to the publicity about mexico. and i think that this is getting ahead of that. it's very smart. i think it's a great plan. i'm not going to say -- this is obviously not just pr. this is real hiring. that's a fantastic thing. at the same time, i do believe there's going to be another round of writing. you don't get a level of that in "the new york times" series without someone saying, okay, come on, we've really got to look into this. maybe walmart is getting ahead of that. >> and the president for the u.s. that we will speak to, the tax increase will be key as we start to absorb the fact that we're getting less every single week. all of us americans. i want to point out herbalife is higher. big day yesterday. up 1.6%. so we've recovered. it's recovered since announcing the short back in december. >> it's interesting, of course,

because ackman's funds benefited greatly from that decline that took place last year and helped his overall numbers rather dramatically. it might be as much as 5 or 600 basis points. he took that enormous short position and watching that stock decline appreciably when he became so vocal that it was a fraud. now we're back to even. but herbalife has a short. my sources tell me he's probably short about 26 million shares. yesterday we learned there are 37 million shares short. you're talking only about 100 million shares in total. so short based 26 million shares. that's a real position for him. he's not short through options. that's taking up an enormous amount of space in his 11 -- roughly $11 billion in assets under management. >> on the other side of this with his stake, he puts it into an account so you take those shares off the market. the percent out there is much lower. the squeeze -- >> one wonders whether at some point -- i mean, if you go

through it and say, well, does he get redemptions, does he need to raise any capital. jp penny is down as well. is he forced to recover. and why you've got guys like loeb and others who are opposed. >> it may not be the fundamentals, it may be the dynamics of this trade. >> the risk-free cash flow here. >> $5 million in unleveraged cash flow. >> the squeeze is even harder. >> the dividend that he -- >> it is back to where it was before this whole battle began. >> now it's up 3.5% on today's session. >> i'll ask you a question, you may not want to answer it. >> okay. >> if you're in a death match between loeb and ackman, who -- >> loeb. >> let me ask you, who is it? >> loeb would bring a gun to a gun fight. >> he would bring a gun. >> maybe three or four.

>> chemical weapons to a gun fight. bob is here on the floor this morning. >> happy tuesday, everybody. we have usac, compression partners go public today. they priced 11 million shares at $18 yesterday. the price talk was 19 to 21. that was below the price talk. the stock opened at $17.50. currently trading at $17.69 or so. however, they increased the deal size. they went from 10 million to 11 million shares. they got the money they wanted. they wanted about $200 million, and that's what they raised. price was a little lower but they raised the actual deal size. these mops are very hot right now. since the ones happened since december, seven have been master limited perms. and they're all backed by physical assets. they throw off nice pieces of income. the yield on this company right now, the current yield is about 9%. we're going to have two other

ones that are coming later this week. i'll give you more details about that. they're pretty hot vehicles right now for people who are obviously hungry for yields. you know, there's a lot of talk about dell. you guys just mentioned it. i think the key question, and i asked everybody is, how do you think michael dell feels about all this? what do you think his thoughts are? here's my thought. i think he probably believes the doom and bloom that the pc industry is doomed is probably wrong and overly pessimistic. and he certainly believes he's making an effort to transition to the more profitable enterprise space. it takes a long time to turn the ship around. that's the main reason for all this talk. let's bring in the enterprise business, bring it up without everybody looking at it. this is the question everybody asked me this morning. number one, how much of dell's free cash flow would have to go to the interest payments? i think they throw off like $3 billion a year. i heard all kinds of numbers, nobody knows exactly.

but would that mean they would have to forgo any acquisitions? they were aggressive doing that. that was part of their whole strategy. do they throw that out the window? how do you model this? dell's earning power is not stable. pc earnings have been declining for a while now. how is a buyer going to model the future cash flow? i don't have the answer for that. that's a tough one. number three, would michael dell become a minority shareholder? he's 16% right now of the company. would somebody coming in want to be a majority shareholder? that would seem likely. here's another interesting issue. dell has a large amount of its $14 billion in cash offshore. would they have to pay taxes to repatriate that. i didn't get a clear answer from the people i was asking that to. who's going to come up with 20 to $25 billion? you talk about lennar, stewart miller had very positive comments. read between the lines. the conference call is going to be at 11:00 p.m. another year of strong profitability. that's all miller would say about 2013. here's the problem, we've said

this before, the stock's already run up. it is going to be very difficult to have a 2013 with new orders up 32%. and i think that's the problem. the problem is not with the company, the problem is with the run-up in the stock and the expectations of the shareholders. that's why you might see the stock under a little bit of pressure today. guys, back to you. >> thank you, bob. when you talk with michael dell, it's interesting, he does not hype the stock. he's very consider at. he doesn't say, you have to jump on it right now. he's not a blower. he's a measured man. to his favor, i point that out. let's head to rick santelli in chicago. >> thanks, jim. back in the old days, they used to call tuesdays countertrend tuesdays. today lives up to that moniker. if you look at the two-day chart of 10s, you can see rates are moving lower. we're down about four basis points. a couple of things should jump out at you, techies, first of

all, looks like we've definitely turned. and second of all, if you're an elliott waiver, it looks like the recent activity on the right side of the chart is the fourth wave of a five-wave pattern. maybe we get resumption of selling pishing it back up again. if you look at overseas a minute, look at interday of the dax. german stock market down about 1% today. countertrend tuesday, today definitely seems to be more of a risk off. how does that treat the fixed income market sorktd wiassociat the german stock market? their rates were down about five basis points on the boom from 150, 155 to 150. foreign exchange with the trend activity going on. if you look at the dollar/yen, it's taking a bit of a breather. nothing happens in one straight move.

and last, but not least, the area oh versus the dollar, also a bit of a setback, after it reached the 11-month highs. of course, we're talking about the euro currency versus the greenback. jim, back to you. >> great, rick, thank you. new shift in platinum and gold prices. a lot going on with gold. let's go to sharon epperson at the nymex. >> jim, we have not seen this since this spring. platinum prices now being more expensive than gold. we're looking at platinum rose above 1690 an ounce this morning. gold prices right around 1677 an ounce. we haven't seen this in ten months' time. but we have been telling you since the start of the year, that this is the year for platinum. that the supply issue is facing that market. the fundamental issues, a big reason analysts are looking for platinum to outperform gold this year. we are hearing from anglo american platinum in south africa. of course, the largest producer of lat numb in the world, saying it is going to close several of its mines in south africa and wants to return to profitability. it's worried about slow demand

and rising costs. we're watching what's happening in the natural gas market, because natural gas reached the highest interday level so far this year on the cold temperatures that are going to be coming in the midwest. it kind of lost some ground here and morgan stanley pointed out with the inventories we have right now and likely to have at the end of march, we'll see continued weakness in natural gas, bottoming just shy of the $3 level. that's what traders are going to be watching as we look at perhaps further weakness in the natural gas market. >> thank you very much, sharon epperson. apple did print low are fos the session. now trading down by about 2.5%. 488 and change. coca-cola is doing something it's never done before, attacking obesity in a new ad campaign. they'll tell us what is behind this strategy. david talks exclusively to the man who is howard stearns' boss. first interview since stepping down from sirius fm.

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facebook hosting its mysterious meeting today. what the social metwork could reveal. shares of facebook rising in anticipation of the event. that brings us to this morning's squawk on the tweet. what should facebook not announce. tweet us at squawk street. we'll air your responses throughout the morning. >> i hope they buy the israeli company that does social mapping. i know that apple rumored to be kicking the tires. waze, again, it is something that is -- let's call it google map with social networking. it's very popular in israel. it would be a game changer for whoever gets it. it's very exciting for people to map their socials. i like it. >> excites david, i can tell.

>> yeah. one of the most beautiful facebook pages i've ever seen. and your pinterest page is nice, too. >> yes, it is. >> works for sammy sosa. no reason you can't do it. >> sometimes i get tired of your overreaction. it's just so over the top. i don't know how you restrain yourself. it's been 15 years of restraining yourself when i talk. that's why you do it. >> yes. i battle hard. >> i often think of the zen. i've gotten the anger management training, working with the truth and reconciliation committee in south africa. don't forget the condi teachings and the dally llama. he knows what he's talking about. gene spurling with his feelings of the debt ceiling

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good morning. we have a phenomenal next hour of the program for you.

talking veterans and gun policy with walmart. we'll have mel karmazin since he left sirius, xm. guys, back to you. >> thanks so much, simon. let's get "six in sixty." we'll begin with cliffs. >> i can't believe it. 7% yield. this is an iron ore trade. >> deutsche cuts pan america. >> these miners are consistent. >> vail. >> thank you. jpmorgan said it's not too late to own this. this used to be up here. i think it can go higher. >> jeffries cuts rejen ron. >> i had len on last week. give me a break. they've got drugs that are beyond -- i would not sell this stock. >> we've not discussed the miss out of sap. >> holy cow. i thought this would be a blowout quarter. everybody did. they have such momentum. i want to see the shakeups

coming. >> celgene. >> maybe here, here, here. oh, now i think bob, the ceo is great. is this really the level where you come in? you feel so cocky. >> what some call old wall. >> what's coming up? >> i'm a believer this united states of america is putting out more oil than anyone believes. one of the guys who is really just reinvented oil is laredo petroleum. this is his third go-around. they are pumping oil. i can't wait to hear about north american independence. this guy is another guy behind that incredible oil rush in this fabulous country. >> which could make this a good year. we'll see you tonight. >> thank you. >> 6:00 and 11:00. as we said earlier, fitch on the ratings that it could downgrade the u.s. over the debt ceiling standoff. wall street bracing for that much anticipated announcement

out of facebook in menlo park. is that going to keep the rally going or signify a peak? we're back in a minute. what are you doing?

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the street." we are about six seconds away from november business inventories. and i doubt if it's going to rattle the cage of the markets, but it will help us fine-tune what will come out shortly at the end of the month. gdp fourth quarter up .3 of 1% on november. business inventories matching expectations with a very subtle revision to october. originally released up .4, now sits up .3 as well. we see a little gain in the equities. i don't know that it's from what's going on in business inventories. and we are dabbling with 3% in the 30-year bond. melissa lee, back to you. >> rick santelli, thank you. let's get a check on the markets on the pack of the business inventories number. not much of a market reaction. fractional gains. this policy was the biggest move that we're seeing in the s&p 500 this year. >> if the s&p subpoena is down more than 47, 4.74, it is the biggest loss of the year.

that's not saying much. but it's still the biggest loss for the nasdaq here today. >> it speaks volumes of what we see on a day-to-day basis. >> absolutely. >> we're seeing the biggest move in technology. that's mainly because of shares of apple here. >> let's look at what apple's done, falling below 488 a few moments ago, now back to 490. we're talking levels taking us back to february of 2012. 480 was the level on february 9th. so it's a good chance we're going to hang on to an 11-month low. we'll see. long day, still ahead. >> fitch ratings out with a warning that the united states could lose its aaa status even if the debt ceiling is averted. david joins us now live from london. david, good afternoon to you. what exactly are you saying that, that the aaa rating is on negative watch? at what point?

>> well, we move on a negative watch, if we have effectively a repeat of the august 2011 debt ceiling crisis. as we approach the point where the federal government essentially runs out of cash and is not able to meet its obligations, the rating is going to go on watch. and the outcome of that watch is quite likely end up being a downgrade. >> just to be clear, there is a line in the diary which you put the united states on negative watch? >> well, we think that on current projections as provided by the sufficient treasury department, the federal government will essentially exhaust its cash resources by the end of february. if we have a situation where we're approaching the end of february and it looks as if we're going to run up against that debt line, then we will

place the u.s. rating under watch. >> i'm not clear what exactly you're objecting to. whether it's the mechanism that is the debt ceiling, or the rhetoric that surrounds it. because both are in acute focus in august of 2011, and then they didn't worry you enough to do what s&p did, which was downgrade the united states. why now? and for which of those two reasons? >> okay. well, first the intent of the august 2011 episode, that was the first time that we'd had a debt ceiling episode whereby references potential to default were actually made. in the 1990s, this is the first time we've actually gone down to the wire and talked about a potential event. we judged at that time that that wouldn't happen again. it was appropriate for us to wait until we had the outcome of the super committee, and also of

the general election of the presidential and congressional elections in november. we've gotten past that point now. and our concern is more of around the predictability and the reliability of the economic policies in the united states. they're staggering every few months from one self-imposed crisis to another. we don't think the u.s. is going to default, let's be clear. ultimately it will do what needs to be done in order to make payments. but you can't keep moving from these self-imposed crises to another. while not addressing the underlying -- >> hang on a minute. you're saying you don't think the united states is going to default. when i look at interest rates on treasuries, the treasury doesn't think they're going to default. why downgrade the united states? >> because a key characteristic and a key feature of a aaa --

any aaa issuer is that it has a consistent and predictable financial debt management policy. and as i say, moving from -- staggering from one self-imposed crisis to another, while not addressing the longer term fiscal challenges that the united states face, is not in our opinion going to be consistent with returning to a aaa rating. the u.s. will still be incredibly strong credit. people shouldn't be concerned in that respect, but it's no longer consistent with being aaa. we think there are a lot of reasons we think the u.s. should stay aaa. they have the capacity to address. but they do need to address that. the way to do it is not for threatening default for the debt ceiling. >> david, thank you for joining us. david riley joining us there from fitch in london.

a little less than three hours, what the meeting might mean for the facebook stock. we have a buy rating on facebook and price target of 32. welcome back. >> thank you. >> sounds like you think between phone and some kind of new engine, probability is probably on the engine side, right? >> that's what i'm thinking. although as you know, the media's been speculating quite hard that it's probably a facebook type phone or operating system. i just think that mark zuckerburg has been pretty clear that search is pretty big for them. i think it makes a lot more sense for them to go after that business. >> what do you think it would look like, how would it work, and what can it do to their share of mobile ads in this country? is it likely to take anything away from what google has already put together? >> the way i'm envisioning this is they would make search much more relevant and much more

appropriate. so that will be a combination of your social network search, combined with using of web crawler to, you know, bring searches from the wider web. it would be a combination of those two. so for example, if you're looking for a car, and you type in whatever car that you're looking for, it might give you results back from your own friends and family and people in the social network, as well as relevant results from the web. and that way you're staying within the facebook system, keeping you more engaged, and that would ultimately help their advertising, and hopefully their e-commerce business down the road. >> how do you model this in in terms of the potential impact of the revenue? >> you know, quantifying clearly this early on is very difficult. but the opportunity is in the billions. depending on how exactly this turns out. but i just think that if they go down the list of priorities, this is going to be the number

one thing that i feel personally they should be looking for. and over time, you know, search is a big business. you know, we know how big google is. and we think that facebook could take some of that market share. >> obviously we know what the stock has done over the past few weeks. the price target is essentially where it's at. we've had technicians on the program saying the stock's tired. 28 is probably more attractive entry point. i assume you also believe we're at levels where the stock is fairly valued. >> you know, our target price, carl, is dynamic. it's based on what we know about the company. we really like the long-term future of the company. and we'll see how the event turns out today. i mean, the stock has been pretty volatile. so target price, while it's under valuation. >> arvind, what should we make of the fact that not only one of the original facebook investors, but actually an existing board member continues to sell stock.

i read he's sold since the ipo over $200 million of stock. if a board member is selling out, what does that say about the confidence of his colleagues in the stock price and where they can take investors in the future? >> simon, as you pointed out, this has been going on for some time now. i think the market and the stock has pretty much shrugged it off. i think people understand that every investor and their investment style is different. and jim breyer, they're getting out now, they're early investors, and we're getting new investors, looking forward to the company's future in the next five to ten years. >> hang on a minute, arvind. if i were sitting on the board, and i knew i had something great, that we look at this afternoon at 1:00, i wouldn't have sold $200 million of stock, would i? >> well, look, i think you've got to mitigate your risk. again, every investor is different.

the stock has had a 65, 70% move. so again, i'm not going to defend anybody for selling or buying a stock. i just think that everybody's investment horizon, everybody's goals are different. i'm not going to look at just one investor. i think there are investors that are getting in now with the idea that this company's going to gain tremendous amount of market share in the -- you know, in the industry they're competing in. >> all right. arvind, thank you for your time. still ahead in the first interview since stepping down as head of sirius xm, mel karmazin sits down for an exclusive interview. [ male announcer ] this is joe woods' first day of work.

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we had hoped to bring you an interview with walmart's head of u.s. operations right now, but we're unable to do so. good morning to you. >> good morning, everyone. about 20 minutes ago, maybe even less at this point, i received a call from walmart, and they have canceled the interview that we had previously scheduled with walmart u.s. ceo bill simon. he spoke earlier today, gave a speech at the national retail federation's big show, discussing things like walmart boosting sources of u.s. products by $50 billion over the next ten years. offering jobs to veterans, when they come back from active duty.

but they decided to cancel our interview today. they simply said it was a scheduling issue, and that they were on their way to the airport. that's all that they would say at this time. really, it's the viewers that lose out unfortunately, because we had hoped to bring you this interview. we'll do what we can to revive it in the coming days and weeks. >> that's interesting, because they obviously had a press release out this morning talking about u.s. sourcing, giving jobs to new -- to returning veterans off of active duty. that got active praise today. it seems like something they would want to talk about. >> certainly. even michelle obama was offering, you know, her support saying she wants other retailers involved as well in this program. i'm not sure what happened. >> i am assuming they don't want to put themselves on television because. gun debate that is raging at the moment. it's a very difficult subject for the largest seller of weapons in the united states. if you look at what happened in the wake of the shooting that we had here, they removed the

bushmaster ar-15 that killed 26 people from their website. and yet we're still selling semiautomatic guns, and many guns sold out of the semiautomatic guns and they say they're not prepared to change their gun mix. they're right in the heart of that debate as the largest licensed gun seller in the united states, as we get moves almost by the hour. the white house trying to change gun policy. >> exactly. >> reluctantly. they didn't want to go in the first instance and said, we didn't realize how important that it was that we were physically. >> we'll discuss that today as well. i wish i knew what walmart would tell us. but at this point i don't. >> i hope they reschedule. >> i do, too. >> courtney, thank you for stopping by. check on apple here. at 490 and change. down more than 2% in today's session. this, by the way, the lowest since february 16th of last year. joining us on the newsline, dan is here.

you've got a price target of $900 a share. which is almost double from where we are now. doesn't that price target seem a little tone deaf to what's going on with the stock? dan? >> yeah. absolutely. price targets in my opinion are talking points for what you think the value of the stock is, what the opportunity for the stock is. so yeah, to use the point, $900 valuation, you know, clearly that's not the direction other analysts are going right now. not the direction this market wants to go right now. but that's the direction this company's earnings are pointing to. all the hype happening in the last few weeks on apple is centered around the supply chain. none of it is demand. every demand that we see for apple products is very strong. there are areas of weakness in europe, smartphone penetration in the u.s. the market overall in the u.s.

is -- not all the points are positive, but generally it's good. >> if you're saying demand is good, but the orders of components for the product for which demand is strong are down, something's got to give here. are you saying that those channel checks aren't accurate? >> no, i am saying that. i would say three things about the research. first and foremost, apple's business is increasingly seasonal. the december quarter holds the greatest weight. in most pure companies like sony or best buy, the quarter-on-quarter drop from december to march is 40%. that's something that the ce industry is used to. second, apple refreshed their entire product line during the december quarter. the iphone 5 came out in december to 12 countries. like 90 countries in december. but they had a new ipad, a new mac and new imax and new ipods.

the entire product line had been refreshed. suppliers had to rush to get all the parts into apple. and so naturally there's going to be a step down on the supply chain from an entire product portfolio refresh in december, to the march quarter, even without seasonality. but third, every quarter for the last couple years, we keep hearing all this ubiquity of the supply chain. and the estimates on the street for apple are never accurate. everybody's supply chain did so great, why are the estimates so off on apple. >> i understand $900 is a directional price target, but you're expecting to be significantly higher. when you compare the declines quarter-on-quarter to the other consumer electronics companies out there, that implies that there is a comparison between apple and those companies. but investor expectations are that apple is much better than

those other ce companies. at this point, what sort of multiple -- how should we understand the story that is going to trade to the other ce companies' multiples which in fact could be lower? how do you get to the upside? >> what i meant was the seasonality. what you look at is annual growth, not so much quarter-to-quarter. so yes, of course, when you refresh your product line -- entire product line going from december into march, your orders in the supply chain are going to be lower. if you expect more than that, they were off base to begin with. >> what multiples should apple be trading at? >> look at it this way. the s&p 500 trades at 500. sorry, at 15 times, or 14 times. and the apple trades at ten times. you say there's a significant discount between the s&p and the way apple trades. is apple a below average

company. are their operating margins below average. is their growth below average. even at the low end, it is double the s&p. so why should apple trade at a discount -- >> so what's the multiple? >> if apple was trading at the s&p, the stock would be close to 700. >> should be trading in line with the s&p 500 is what you're saying? >> i think it's trading at a premium. but it's on par with the discount. it would be materially higher than it is today. >> dan ernst, good to speak to you. >> coca-cola plans to address obesity concerns for the first time ever. new ads for popular drinks. the president and ceo of north america will lay out the details of the new campaign on a first cnbc interview. if you think running a restaurant is hard, try running four. fortunately we've got ink. it gives us 5x the rewards

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if the wealthy are giving more to the government in the form of taxes, it stands to reason they'll give less to charity, right?

robert frank says maybe not. how come? >> well, simon, as you mentioned, normally higher taxes means less money for charity. the wealthy see charity and taxes two sides of the same coin. taxes go up, charity must go down. press secretary for george bush summed it up in a recent tweet saying, quote, i and many others will likely donate less in 2013. but a new study from the nonpartisan tech center says charitable giving may actually increase this year by $3.3 billion. tax hikes are actually the main reason why. here's how it works. taxpayers deduct their charity at their marginal tax rate. last year the wealthy could deduct 35 cents for every dollar they gave. the current rate is 39.6%. so they can deduct 39.6 cents for every dollar they give. their cost of giving has, in other words, fallen by 7% for those making $400,000 or more per year. the same is true if you're

giving away stock or real estate that's appreciated in value. the higher capital gains rate making giving more economically attractive. the cliff deal does limit certain deductions. but the benefits of these higher tax rates more than makes up that limit on deductions. so net-net, the wealthy get a bigger tax cut this year for giving. it's all another way in which the cliff deal turned out to be a lot better than expected for the wealthy. hopefully, for charity. you can read more on this story on cnbc.com. back to you. >> robert, thank you for that. robert frank. still ahead, mel karmazin's first interview since stepping down from sirius xm. here at post 9 in a cnbc exclusive interview. plus coca-cola's new anti-obesity campaign. i'm up next, but now i'm singing the heartburn blues.

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good morning. we're almost one hour into trading. here are the stories we're squawking about this morning. 7:29 on the west coast, 10:29 on wall street. celgene upgraded the stock from neutral. the biotech firm now up 24% so far this month.

hewlett-packard is the biggest decliner on the dow falling more than 1.5%. hp shares are up 17% since the beginning of the year after a very poor year last year. platinum prices exceeding gold for the first time in ten months. closing in on $1700 an ounce. do you out there remember this ad? ♪ i like to teach the world to sing in perfect harmony ♪ >> every knows that iconic, the hilltop ad is what it's known as. coca-cola tackling obesitobesit >> for over 125 years, we're bringing people together. today we want to bring people together on what concerns all of us, obesity, the overall health of our families and country at

stake. >> joining us in a first on cnbc interview, steve cahillane. in periods throughout history, why now, why do you have to do this ad right now? >> we think right now is the right time. obesity is a real problem in this country. it's a growing problem. indeed, around the world. and too often the debate becomes very simplistic, don't drink soda and the obesity epidemic will magically go away. we know we haven't caused the obesity epidemic, but we want to be part of the solution, and we can make a real difference. we need to make the debate a much more complex and holistic debate about calories in, and calories out. we believe we can contribute into both parts of those debates. not only our company, but also

our industry. it's a very competitive industry. but this is one area where the pepsico company, dr. pepper, all of our competitors are aligned around this being a problem that has to get solved. >> right. and through advertising, coca-cola has made clear in the past, that there are choices that can be made by the u.s. consumer when it comes to calorie count. you've also de kreelsed the size of your packaging, put calorie counts on the sides of your packaging to make it very clear. at the same time, does coca-cola feel like it's under attack, considering bans on certain sizes of soda? >> i don't feel we're under attack. but we feel like now is the time to step up our participation in the debate. because although each mayor that we know, and we deal with, we know has their citizens at the heart and soul of what they're really trying to do. we believe there's a better way. we don't believe regulation and public policy and singling out one food item for taxes or

restrictions is the right way. we believe that working with government, civil society and companies around a more holistic approach, that addresses the calories in, through things like, you just mentioned, lower calorie offerings, no calorie offerings, portion control size, front of pack labeling, all these things address the calories in, letting people know exactly what they're consuming, be more mindful of what they're consuming. but the other portion of the equation is what we're really starting to address with this new advertising campaign, and that's how do we inspire people to move more, to be on the go, to burn those calories. >> right. >> in a way that is inspiring. >> we've already seen a decline in north america in sparkling beverage sales. if this advertising is successful, you might see a bigger pickup in vitamin water sales, in water sales and non-sparkling. it's been made clear that you need to have the sparkling beverage side of the business to

work in order to make the numbers work. that's the core of the business. what is the longer term impact on coke, if there is this shift, continued shift and maybe a deepening shift away from sparkling? >> look, we're going to give the consumer a whole wide array of choices and let the consumer decide exactly what they want, when they want and how they want it. we do believe there's a vibrant future for sparkling beverages in this world. it is the cornerstone of our country. coca-cola will always be the cornerstone of our company. we've got nothing to hide. we're proud of our brand. it's 140 calories. and we learned through our research that many people think there's many more calories in a coca-cola. we want people to make the right choice. and we know that coca-cola, at 140 calories in a 12-ounce can, can and is part of an active, healthy diet, part of a healthy active way of living. and we believe that will continue in the future as well. >> steve, obviously this is

going to be a complex broad argument, as you said. but for the consumer who is interested in buying and drinking a coke, how much of this is trying to convince them that a diet coke is a good substitute? >> we're not trying to convince that diet coke is a good substitute. diet coke is a fabulous brand. the number two brand in the united states right now of all beverages. many people choose to have a diet coke as part of their active and healthy way of living. many people decide to have a coke as well. we're not trying to make them have one choice over another choice, we're inspiring them to choose what they want, when they want, whether that's the time of day and what they feel like. but we believe in both of those brands. we believe both of those brands play a great role in people's active, healthy lifestyles. >> sir, if you are honest in your conviction this that is about informing consumers about what products are going to do what their bodies, and you believe now is the time to tell people that, isn't it also logically true that the fact

that you haven't done this in the past may be one reason why you have obesity, 30% of adults in the united states, and 17% of youths? >> yeah, i don't think this is entirely a new thing. we are stepping up our activity, because we believe now is the right time. but i could show you ads from the 1950s that talked about calorie counts, and active healthy living. so we've been involved in this for a long period of time. we'll continue to stay involved in it. what's new is the obesity epidemic has become just that, an epidemic. but if you actually look at the sale of full sugared beverages over the last decade, you would see a decline of 30%, at the same time the obesity incidence has been rising in this country. finding a cause-and-effect there is very difficult. >> surely that's because so many health professionals tell people, don't drink sugary drinks. that is what is making you fat. you hear it time and time again.

the latest scare is on fructose, for example, which may not actually trigger the brain to realize that it is full, when it has consumed a potentially large amount of your beverage. >> there is a lot of science out there that is not what i would call robust science. what we know is a calorie is a calorie. and calories in, and calories out, is a simple equation, but it's a complex issue. and anybody who goes out there and says, if you just drink less soda, or if you eat less of this, then you will be on your way to a healthier lifestyle is doing a disservice to those people that they're talking to. anybody who goes out and says, look, if you take in 2,000 calories a day, here is how you need to burn those 2,000 calories, is doing a much better service for americans and citizens all around the world. it's not a simple issue. offering simple solutions, we would advocate is absolutely the wrong approach. what we're trying to do is make the debate more holistic, more about how do you get people on

the move, and how do you make them aware of what they're putting in their bodies, from a cal ray standpoint. >> steve, last question. we'll make a turn here away from obesity. but in terms of the impact of the payroll tax increase on consumers, do you anticipate that there could be any impact? the tax policy center out with these numbers. this could mean $18 to $20 less per week for the average american household, $900 to $1,000 a year. any fear of cutbacks in beverages? >> i think there's a real fear there for any consumable good. anytime discretionary income goes down, i think there's a cause for concern. what's also a cause for concern, though, is what's going on in washington right now. and, you know, if we can avoid more brinksmanship as we approach the debt ceiling, that would be good for consumer confidence. it's taking a little bit of money out of the consumers' paycheck at the same time it's under attack with another washington crisis would be something that is indeed worrisome.

however, we are seeing some pretty good signs in the economy right now, so we're hopefully optimistic that they'll continue. and last thing anybody who's bet against america has proved it's a losing bet in the past. we're very bullish on this country. >> steve, thanks so much for your time. thank you for joining us first on cnbc. >> thank you. interesting debate. meantime, goldman sachs making waves with the bonus pay joits. we'll get that in a moment. after the break, david faber's exclusive with mel karmazin. he's here to give us his very first interview since stepping down as the ceo of sirius xm. we're back in a couple of minutes. mine was earned in djibouti, africa, 2004. the battle of bataan, 1942. [ all ] fort benning, georgia, in 1999. [ male announcer ] usaa auto insurance is often handed down from generation to generation

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the top spot at sirius satellite radio in 2004, left the company about a month ago. during his time as ceo, the subscribers jumped to 23 million. and avoided a very close call with bankruptcy in 2009, when john malone's liberty media injected $530 million in return for 40% stake. that stake now just under 50%. one key reason mr. karmazin stepped down. we're joined by mel karmazin, first interview since he retired. but he hasn't really retired. am i going to see you on the unemployment line? >> this is my second retirement. i retired from viacom. i, quote, retired from sirius xm. and my wife and i discussed we will retire one more time. so there will be a third retirement. >> so you're looking for work essentially? >> i have to go to the unemployment line to register for my unemployment checks. >> as you should. >> in between that, i'm starting

to look for work. >> in all seriousness, you clearly want to keep going. so when you look out in terms of opportunity, what potentially interests you? what is a viable idea here? you can't be a number two, we know that, previously not just with viacom, but now as well. >> good observation. though i never went to a psychiatrist, i do know myself, and i know i have to work for a public company with an independent board. and i hope i could find one that would be fun and challenging. so far, when i think about it, i truly can't come up with one. to get whether or not they would want me. if i were to put on a piece of paper what's out there that i would like to do, the only thing that i have come up with legitimately is that i am thinking of calling governor christie and trying to help bail out the jersey shore. i mean, we've lost a guest house there. we have another home there. i was just down there. and i have a passion to try to see that jersey shore come back.

and if there was something i could do, i would probably consider doing that. >> so you would have a boss there, the governor. >> no, i would be the czar. my scenario -- or like the pope of the jersey shore. so that there's no checks and balances. >> that could be a good show on mtv. well, you wouldn't take it to viacom. >> well, no, i probably wouldn't take it to viacom. >> all seriousness, though, you want to work again. you've been through a lot. content distribution, obviously all your years in radio and the move to satellite radio. forget opportunities for you specifically, but when you look out and see potential opportunities and where things are right now, and where they're going, given your traditional media background, what do you see? >> i've been a seller of media assets and media stocks over the years. i think the technology that's come around has been very

disadvantageous for these companies. whether you're a terrestrial radio company, a newspaper company, a television company, an outdoor company, i've been offered all of those kinds of companies to acquire when i was part of sirius xm. there was nothing there that i thought i was interested in acquiring. i'm not a private equity company, so, you know, if you're a private equity company, you can buy something for the purpose of making money. so if you buy it low enough -- what i'm looking for is something i'll enjoy doing, and have a passion for, and i have not seen that. and it's possible that i just won't do anything. i was talking to you earlier and i said that my son wants me to buy a sports team. which he has a passion for. >> good for him, right? >> not for me. i have no interest in that. so i just don't know exactly what i'll be doing. >> nobody knows the ad market perhaps as well as you do and where the ad dollars are flowing. they seem to be flowing, following the eyeballs, which would be digital internet.

is that going to be the case? give me your prognostication how that's going to go? >> i think the broadcast networks are certainly doing really well. you know, with the big events, even though the audiences are dropping. so you've heard the cliche about analog dollars and digital dimes, now mobile pennies. as more and more of the eyeballs and the audience is going to mobile, the ability to monetize it becomes even more challenging. so facebook and google and a lot of companies have really a great mobile strategy. i'm not sure that the true big dollars are going to be there -- >> they've got to be there at some point, don't they? if that's the way people are digesting content? >> i don't know if you're going to be able to monetize it to the same degree that you were able to monetize it in the old business. >> what does that mean? >> i think what it means is it's a great time to be a consumer. the consumers will have more choices to get their content than they ever had before. they'll have a ball.

the question is, even the content owners. it's not quite as easy to just say, well, gee, i have this content and i can then sell it across all of these platforms. you know? the people who are the big winners are the nfl, you know, people like that. what the nfl has done, interestingly, is they've done a network television deal. they have a directv sunday ticket deal. they have their own nfl channel. they have a terrestrial radio deal. they have a satellite radio deal. they have an internet deal. they have a mobile deal. >> it keeps coming. >> and at some point you're going to have all of these advertisers that have a choice of where do they want to advertise on the nfl. and as there becomes more and more of this competition, and more choices, the advertisers have a field day, and they have the advantage over the media companies, because they can sit there and say, okay, i'll buy it in mobile if i can't buy it in broadcast network. >> let's talk briefly about sirius.

you leave the company, 23 million subscribers, great deal of cash flow. different when obviously you took over in 2004 despite a lot of bumps along the way. really couldn't be a number two? what's the problem? malone, you can't get along with him? >> they're really good people. it has nothing to do with it. i think if you think about the media companies, and you think who's in charge of newscorp, okay? chase is the ceo. but ruppert is in charge. the job i would like would be a job along the lines of what jeff has, or what bob iger has, which is sort of being a ceo. not interested in those kind of companies, that size company, like something much more entrepreneurial, turn-around, building it up. >> you had it with sirius. >> and we did it. >> is the story over there? >> no, i think the story is going to continue. i believe that sirius xm has the next few years locked.

all right? all the car deals are done, the contest deals are done. there's no big threat from a competitive point of view. the big threat would come in the wired car. i think sirius xm has the position to win in that field. >> you do? when wi-fi comes and pandoras of the world can bring a cohesive competition there? >> sirius can do everything that any of those people can do, plus they have the satellite to be able to take one and one and make more than two. so it's a challenge, and it's much more competition. but i think it's a real big opportunity for sirius to be even stronger when the internet and wi-fi comes to the car. >> given your parameters for a new job, what i've heard from you here, it's not going to be that easy for you. as talented as you are, and good looking, it's still not going to be that easy. >> i'm absolutely not prepared. i have no idea.

>> do you want governor christie's phone number? you can hang and hang with me any time. >> it's a great opportunity. i'm looking forward to doing it. >> thank you. >> mel karmazin. the big tax write off that you're counting on may just get new trouble with the irs. much more "squawk on the street" after this. ♪ ♪ [ male announcer ] some day, your life will flash before your eyes. ♪ make it worth watching. ♪ the new 2013 lexus ls. an entirely new pursuit.

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welcome back to "squawk on the street." what time is it? it's time for the santelli exchange. there's a little nefarious activity. cause/effect. i like cause/effect. most of the time we do it in every day life and don't even know it. i have a friend who said after notre dame lost, he said every time i bet on them, they lose. just like milk and knees. that's always a good one. sin most drug addicts start out drinking milk it causes knees. my knees hurt and it's going to rain. his knees didn't cause the rain. you get it.

cause/effect. now for the more nefarious aspect. i heard 14 times yesterday that dysfunction in the government is the main cause of our problems. that's the effect. you know what the main cause of our problems are? we have problems that we need to solve, politicians who know how to solve them except for solving them is not only going to be painful for everybody, it's going to be painful for each of their bases. so dysfunction ensues. but dysfunction certainly is not the cause, just like ratings downgrade aren't caused because of the dysfunction. they are caused by the inability to deal with spending entitlements. the fed. this is a good one. the fed has said many times that their programs were needed because we needed liquidity in the system. as anna schwartz said, it certainly wasn't applicable.

it was due to the toxic balance sheets. suspicions. this is a good one and very contemporary. there's not only an op-ed in the journal today but what the president talked about, that the republicans/fiscal conservatives are suspicious. they are suspicious about government, about welfare, entitlement. they are not suspicious about that. they are suspicious of how we can continue to spend more on the benefits than we take in for the contribution for those benefits. this is always a good one. the answer is always spend more money. in the end, it fixes things. let's look at the whole time frame. in ten years when we look back, is the weight of debt going to take care of all of the impulsive upticks, upward mobility? oh, boy, taxing the rich is the problem. why people that are stuck in the lower middle class or lower

can't move higher. makes no sense at all. yesterday we had a man orngs he had at great commercial during the campaign. lowering the top does not raise the bottom. upward mobility may be a problem of education. how many times did you hear the president say that we don't spend enough on education? the problem is, we have no cause/effectiveness aspects in place. spending more might make politicians feel good when they go home but doesn't cure the problem. last but not least, green energy. we're going to subsidize the solyndras. don't think so. it's been around at the beginning of many centuries. maybe the problem is that when you have 330 million people in this country, solar panels just aren't going to cut it for what drives business. energy, real energy like natural gas.

cause/effects, be careful. there's a lot of nefarious activity. >> flagging this to our viewers, mark cuban walking "squawk on the street." the president is lying when he says a calorie or fructose is the same as any other to your body. we just had the discussion talking about their new initiative trying to address obesity. interesting, huh? >> real turn here. >> a lot more "squawk on the street" still ahead. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.

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little bit late here. what's coming up on "fast"? >> analystle who made that call and a partner who is the chairman of open table on why malls are doomed. tonight at 5:00. >> thanks. we'll see you tonight, guys. see you later. the third hour of "squawk on the street" starts right now. and we are live. markets today have been hanging on to moderate losses for most of the day. dow is down 21.

s&p down 3. earlier this morning because was down more than that. in fact, it's down the most that it has been all year long. follow through from those reports that melissa just mentioned, the company cutting iphone components. lowering the tries target of 660. better than expected sales. shares of retailer express surging after the company says holiday sales were better than expected. leading express to raise fourth quarter and full year guidance. a dose of breaking news here. steve liesman has details. >> carl kt the national retail federation giving us their estimate for total holiday sales saying it was up 3% versus an expected 4.1%, this using the final december data that has come in this morning. it is the worst of the past three years. retail sales rose north of 5.5%. 3% being the lowest gain since the 0.3% we got in the midst of

the recession in 2009, i believe. the official term for a 3% gain in christmas is kind of eh, that's what it s retail sales in december up 0.5%. year on year, up 5% total. ex autos, 3 and the core sales up 0.6%. here's are some places that did well in november and december. gas stations sales were down. auto sales were upped. clothing not too bad with a nice showing in december there. department stores not too great. i think that's what we're picking up on. nonstore retailers. that's sort of the internet. they don't have a very good measure of that. by the way, these december numbers are preliminary. electronics doing okay in november. retail sales right there. you can see they ticked up just a little bit going into the month. finally, i'm seeing gdp reports tracking between 0.6 and 1%. i saw an estimate for 1.5%. the eh christmas sales this year

also leading to a not so greatest mate for growth in the fourth quarter. carl? >> you and your economist mumbo jumbo. i love the eh. >> official term. that's in the books. >> steve liesman, thank you. facebook's big reveal is about two hours away and the rumors, of course, are flying. could it be a search engine? a phone? we are live at facebook headquarters in menlo park with the latest. then, jean sperling is here with the debt ceiling debate. what that means for the economy as the house prepares to vote on a package for hurricane sandy victims. one republican congressman says we need to consider big budget cuts to pay for that. congressm congressman mick mulvanel will tell us about his big plans.

first, we'll talk about facebook. julia boorstin is live with the latest on that. good morning. >> good mormg. i expect 120 reporters and bloggers to be here, to be facebook's big mystery announcement. the social network has done a great job. face book hasn't leaked a thing. i expect mark zuckerberg to unveil a new product, something to improve users''s experience rather than a back-end change. consider the priority that zuckerberg and sandberg are making, i don't think the announcement will be a facebook phone. whatever it is, you can bet there will be obvious implications for facebook's bottom lines. what are the options? a new app store, a new gaming platform to compete with zynga

and lots of talk about facebook's work on a social search engine. facebook stock has been bolstered by a slew of analyst reports. deutsch bank upgrading from hold to buy. they are both bullish on facebook advertising prospects on mobile devices as well as exchange. facebook employees are starting to trickle in. they come in around 7:30 local. the number of shuttles bringing employees down from san francisco, we expect a line to start forming for people to get into that event in an hour and the event starts at 1:00 p.m. eastern. i'll be live blogging. carl, facebook is not allowing any broadcast cameras and they are not going to be live streaming it. we'll bring you the latest. >> almost like a courtroom. we can't wait to see some of the

cameras. before we get to that, i'm reading barrons and closet indexing was picked as you saw over the weekend by every major newspaper and i'm not going -- now that i'm not going to use that term anymore. benchmark, closet indexing. from november 14th, closet indexing, and facebook. let's run that tape. >> i think this is what is happening right now with facebook. it's very simple. we talk about the closet index all the time and the fact that facebook is not owned by closet indexes as put a lot of people in the mind set of wanting to own until stock for the simple reason that it's not overrun by

these people and 31% of the shares are institutionally known and here's your largest institutional holders. not the typical closet index names. >> the same person who trapped the apple closet indexing, that was a top there and he thinks between that day, when the stock kwent up 60%, institutional ownership to the last reported date is 37%. it's probably closer to 35 to 50% and here's the reason why. it's all about the benchmark huggers. probably closer to 55% now.

the expectation, again, if you believe this gentleman's work and he's done an exceptionally good job for making you money he thinks he will continue to buy this stock and that's the expectation which will be somewhere in the 70 to 80% category. the same reason it went down is the same reason to go up. you've got to pay attention to this. and i know how they think. >> there is some upside, but not a lot. >> he's been dead right. that's sort of the near term level. >> that's a technical level where they are accumulated

stock. whatever happens at 1:00 today, even if it's disappointing in the short term, look for continued buying until the 70 or 80%. and it's continuing to come out of apple. apple is down. and a market weighting in apple, that was the top. >> great stuff. >> yep. >> thanks, gary. >> by the way, this is the best looking suit i've ever seen. >> we have to go. thanks, gary. >> for the president taking a tough stance on the final news conference and will not negotiate over the public debt ceiling. here's what he had to say. >> they will not collect our ransom in collection with the

american economy. the financial well-being of the american people is not leverage to be used. the full faith and credit of the united states of america is is not a bargaining chip. >> and we're joined by gene sperling. good morning to you. >> good morning it appears, at least, that the president is going to try a strategy to stay involved without being involved how is that going to work? >> first of all, you have seen that the president has been engaged in very tough negotiations with republicans over the last two years and for all of the frustrations we actually have cut the deficit by over 2.5 trillion and it's coming down. that's a combination of $1.5 trillion of discretionary spending cuts over the last couple of years and the revenues

that were raised in the fiscal cliff agreement and the interest that we won't be paying because of the deficit reduction. that's point one. and the president has said this repeatedly. is he absolutely willing to work with congress, with republicans to go further on deficit reduction in line with the offer that he had put out to speaker boehner. that will bring the deficits down even further, below 3% as a percentage to our economy. bringing down the debt as percentage to our gdp. critical and important for competence. so he very wants to engage on balanced deficit reduction. what he has said is the following. he cannot tolerate congress deciding to not pay its existing bills. and i mean nobody should use the threat of default, the threat of hurting the full faith and credit of the united states as a bargaining chip in negotiations.

if anyone tries to, the president is just not going to tolerate or negotiate or engage with that type of behavior and i think that you're starting to hear an emerging group of outside republicans agreeing with the president, particularly in the business community saying you do not hold the united states economy and its credit rating hostage no matter how much you care about a particular side or point of view in a budget negotiation. >> speaking of which, not a republican necessarily but allen writes in the journal, he says the consequences of hitting the debt ceiling are too awful to contemplate, worse even going over the fiscal cliff do you believe that they are unlikely to disappoint point us? >>. >> he is willing to engage in good faith action to reduce it

further and that would be entitlement cuts and savings with further revenue increases and loopholes and tax expenditures. and what he's simply saying is the obvious and i've been around for 20 years. there's lots of good ways for us to fight with each other on the deficit and negotiate and take tough positions. the president is saying he's taking one option off the table and he's not going to deal with anybody who is going to threaten the default of the united states government to get their way and it was harmful to their businesses, harmful to economic competence as the debacle that we went through in the summer of 2011 and they are saying, let's

not go there again. >> when he was a senator, he voted against a debt limit increase. just had an entire campaign about this and by the way the american people agree with me. does the white house believe that the election was to spend whatever they need to, that the debt ceiling would not be a consideration in any of this? let's separate out two things. the president affirmatively believes that we need to bring our deficit down as part of an overall growth in job strategy. we need to do it in a smart way. we need to go further and the president had a broader deficit reduction offer on the table to speaker boehner that he unfortunately walked away from. the president made very clear yesterday that what he thinks the american public supports is balanced deficit reduction, good faith compromise between democrats and republicans and he

made very clear the united states congress, republican leadership there cannot threaten, make america a dead beat nation or to default or hurt the full faith and credit of the economy in ways that we do damage to economic growth, damage to our businesses, damage to our workers as a budget negotiating tactic and if they try he is not going to engage or tolerate that type of behavior. >> finally, gene, i'm sure you've seen what fitch has said about their rating and outlook for the u.s. debt. they say if it's increasing, in large part, gene, just because of the way that it's mechanized, is there any way out of that? >> you know, there is. one of the things that the private sectors have always said, the private sector will always say to any white house, any administration, they will talk about the importance of economic certainty for their investment and long-term

investment decisions. right now the thing that all of us could do but we need the help of the united states congress and republican leadership there is to say that while we are going to continue to have tough negotiations or tough legislative process on bringing the deficit down, we are all going to agree now that the era of threatening default is over. and if the republican leadership were to do that and if we were all going to agree to taking default or full faith and credit, it's a significant boom to economic confidence and we have that capacity right within our control and i hope that the republican leadership as they are meeting over the next few days will come to the basic economic realization. >> gene, always good to have you. thanks so much for coming on. >> thanks for having me. >> remember that ex trab charitable donation you made on your tax returns last year the

irs may have a different take. >> the cause and effect, we'll talk about the clawbacks from companies like fc stone and mf global and how the current climate may have played into that and speaking of cause and effect, maybe gene sperling ought to have watched. talking about all of those issues with me in four minutes, be there. [ male announcer ] you are a business pro.

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remember the extra charitable donation that you made on your 2012 tax return, the value you thought it was worth may not even be close and the irs knows it. good morning, eamon. >> good morning. the inspector general is out with a new report that says that a lot of us are getting it wrong when we get it wrong. the irs is saying that it's causing the irs to pay out too much cash for clunkers. the rules, they say, are not being followed by a lot of americans when they are taking large noncash charitable donations, things like cars being donated to a charity. in 2010, more than 273 taxpayers claimed $3.8 billion in potentially ear roan yous contributions. that all resulted in a about $1.1 billion in a reduction in tax. and the inspector general is saying approximately 60% of

donors did not comply with reports requirements. what they are saying here is that the irs form 1098 c in particular is one that a lot of payers are not filling out and filing with the ir is s. that's what the form is that you're supposed to turn in when you donate a car to charity, you're supposed to document the value of that car. what they found is when they checked with the charities, a lot of them did not have the same value, that the taxpayers themselves were reports. this is going to be one to watch out for. they made changes at the irs and the irs so new rules to come here, carl. >> thank you, eamon. >> is it a phone, a search engine, or does facebook have something else entirely? what does mark zuckerberg have up his sleeve? congress wants to trim $30 billion from the budget to pay

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welcome back to "squawk on the street." rick santelli here with my special resident lawyer guest james. the topic for me is cause/effect. we live in a litigious society. put the two together and there's huge explosions. let's start out with mf global. >> the u.s. trustee is trying to get customers a plan to get 93% of their money back from the u.s. half of their money back if they were trading foreign futures. however, the creditors are so fed up that the three trustees have built over $2 million in fees. >> how much have they spent on legal fees? >> over $200 million. >> litigious society. do you think that figured into

the demise of mf global. >> sure. zurch allows to take the money off the shore, lever it up 30 to 1, 40 to 1 and something goes wrong, boom. >> all right. let's keep with the theme. i notice fc stone, a brokerage firm i'm very familiar with, had a clawback. >> you had all of these customers who just piled into centinnel and they said, do i go out of business or do i cheat? >> so pair dime financial, even madoff, why did he get caught?

okay. so is there an update with regard to fc stone and what's going on with sentinel? are there going to be more sentinels? what do you think is going to happen? is fc stone going to go out of business or having to write a check for over 13 million? >> it looks like they will have to write a check. a situation where some friends got 100% back, some 75% back and customers got zero. >> so the moral of the story, i'm going to ask have to cut you short, a litigious society is going to keep giving or taking. the environment we live in is still conducive to be la tij jous because no one can make any money. carl, back to you. >> rick, we'll talk to you in a bit. rick santelli. goldman is making waves with its bonus payouts. mary thompson has a flash. >> the company confirming that goldman has decided not to delay

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the european markets are closing now. >> a lot of headlines out of europe. simon will walk us through the important couple. >> there are two headlines that i would point out. life may not be as it first appears. the first is the news that germany contracted in the fourth quarter. the second is that italy and spain continued to have decent bond sales. that's the close. let's talk about germany, first of all, and at an annualized rate of 2.25.

it's important to say that a.j. believes it may be giveback from a strong quarter and already they believe they are rebounding in the first quarter. more importantly, the german labor market remains extremely strong. unemployment is low and wages are rising. therefore, the public sector is actually in surplus. so don't be too alarmed for the general outlook fortunately what is happening in germany. now, let's look at the second big headline coming out of europe and that's the fact that spain today had its second, quote, good bond option of the year and it is true to say that yields have basically continued to decline. however, behind the headlines that you're seeing and italy is also auctioning a 15-year bond, the economic situation is in fact dire. it may be that the situation is not sustainable, these good headlines from spain as we move through the year. i mentioned that the yields continue to decline. we just focus in on just this year to date chart, will you see, in fact, some believe we

may have bottomed on yields. in other words, the rally on spanish debt may have topped out. and that's because they are still running a huge budget deficit, 9, 10% of gdp. the tax rises that they've ordered and the spending cuts that they've ordered are not writing the economy, as you might expect, and the fear is that at some point during the year that could all come back to haunt them in the bond market and the ecb has toint ve interv. we had decent sales figures coming through from burberry and an upgrade from merrill lynch. h & m has come through with good sales figures. really, i think what happens here in the united states is what will drive these markets, particularly on the debt ceiling. >> yeah. important that they have their own retailers that mean a lot. >> you don't see them moving all the markets as retailers here

might move them. >> true enough. thanks, simon. let's get to energy and commodities. sharon? >> carl, the big mover is definitely platinum. platinum is the story in the metals market and commodities market largely driven by the news coming out of south africa. the world's largest producer of copper says it's going to expend in retaliation employees say that they are going to go on strike and perhaps shut down all of the country's operations. this is a significant development for the plant and it's caused prices to go above $17 an ounce and platinum more expensive for gold for the first time in ten months' time. the largest commodity, gld, that has been relatively flat this year while the pplt, the largest

platinum and plenty to look at beyond the pplt and a lot are gaining ground. back to you. >> sharon, thank you so much. pisani is here talking about the bond down. >> gold stocks are strong, gold strong in general, transports strong, near new highs and again a little bit on the weak side. i'm heartened by the bank activity. bank will droop immediately after the first report earnings. that was wells fargo on friday. look here, barveg of america, morgan stanley on thursday, jpmorgan tomorrow. goldman is tomorrow as well. all trading to the upside after being down yesterday. nice little bounce here in trying to go against the typical trend. keep an eye on that one. there are people who will typically play this and short these stocks going into earnings season. they may be wrong this time. i've had a lot of questions

about master limited partnerships. we covered them 20 years ago when i was a real estate reporter. there's three ipos this week and a lot of people are interested in them. here's a quick explanation. this generates long-term contract. typically oil and natural gas pipelines, throws off a lot of cash and they are able to return it in the form of a yield. high dividend yield is the main attraction. you can see that today, master limited partnership, we had an ipo, put it up here, usa come prgs partners. that went public today. and natural gas compression services. this is partly a play on shale drilling here. put up the next screen. the important thing is we've got overall a company with the 9% yield for them. 9%. nat gas is going to affect the price. opened at 1750, urk see wheyou

where it's trading right now. these issues depend on what's going on in the company overall. and that's the important thing right now. let me just tell you about the estimates. they depend on the amount of money they can get for the compression services. that's obviously an issue right here. let me talk about some of the other things going on. we have a couple other mlps. two of them n. fact. move forward on the full screen. the important thing is, suncoke. again, this company is making coke making facilities to aid in steel production, a little bit unusual for mml. cvr refining, 18% yield. look at that. that's why i'm getting all of these calls and interests in these company. if you're confused and don't know what to do about it, there's an etf.

there are several. jpmorgan and investing in oil and natural gas pipelines, baskets of these stocks. that's the symbol. amj. you can see that since we got the fiscal cliff resolved and we know what the taxes are going to be on dividends, it's jumped dramatically. it's moved up 100% in the three or four years that it's been trading. there's an etf for that as well. >> bob pisani, thank you. apple is down for the day. seema mody has that. >> further speculation and concern around apple has cut orders for iphone 5 screens. that's what is worrying the street right now. today, analysts over at numerous securities and citing weak iphone 5 trends. even yesterday, carl, we had a report that said that the iphone 5 was losing its cool factor

among teens. it does seem like there's this negative sentiment brewing around the iphone 5. analysts will listen into apple's earnings call next week. carl? >> mira was saying downside risk. seema mody over at the nasdaq. the discussion continues around the debt ceiling talks. what does all of this mean? brian, welcome back. >> carl, good to be with you. >> we've had this discussion about the economy that we continue to muddle through. you talk about the debt ceiling that if there's ever a grand bargain, you're going to wind up saying you weren't bullish enough. >> that's right. you know, carl, to go back to this plow horse, if you think about the last 3 1/2 years, it

goes all the way back to dubai and the bp oil spill and the tsunami and nuclear meltdown and the first fiscal cliff and first budget deal and debt downgrade, all of these things and the economy has continued to move forward. that's what we think will happen here in the future. we also think stocks are very undervalued. so if we do get a grand bargain without some major increase in taxes and we actually get some kind of reform and entitlements or spending pullbacks, it could cause a boom in the economy. it could cause a boom in the stock market as well. >> of course, there are always those who may say it's a plow horse but we've stuck full of open pea yes, ma'am and growth hormone courtesy of the fed. >> right. >> they say an exit may happen sooner rather than later. that's a mixed picture. how likely is it, in your view?

>> i hope they exit earlier rather than later. here's our view. and i can only do it in a nutshell. that is, the quantitative easing, because bank have taken that money and given it right back to the fed in the form of excess reserves, that qe itself has not lifted the economy. it's not growth hormone. what has been helping the economy is very low interest rate, 0 basically short-term interest rates and the fed is spending 6% more m-2 every year and that's helping the economy. but the real driver of growth is technology. it's the entrepreneur. it's the innovator. it's the creator. we have the cloud, the spark phone, attacking all of these great new technologies and that's what i try to draw investors' focus on. let's not pay so much attention to what government is doing. let's look at what is causing growth underneath, what has always caused growth and that's

entrepreneurial activity, innovation, and activity. we have a lot of it going on right now. >> finally, brian, housing is turning into a pretty nice tail wind here. i wonder, though, you see the ten-year at 285. >> right. >> how much can the market withstand if the 30-year mortgage continues to tick up? >> when we go back to the early 1990s when housing was pretty strong, interest rates were a lot higher than they were today. i think the fed is artificially holding rates down. we could have the federal funds rate at 2, 2 1/2 without any harm to the economy. we could take the ten-year treasury up to 3, 3 1/2, even 4 in my opinion without even real harm. there's plenty of liquidity in the system. if growth picks up, those kind of borrowing rates won't be an impediment. i just hope we get real spending

cut. that's the only way we're going to fix this budget in the long run. >> don't hold your breath, brian. >> i'm not. >> we'll see how serious they can get. brian westberry. thanks. >> thanks, carl. when we come back, [ male announcer ] where do you turn for legal matters? at legalzoom, we've created a better place to handle your legal needs. maybe you have questions about incorporating a business you'd like to start.

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. coming up on halftime, a new reality shourt lived. and counting down to facebook's big reveal. why you shouldn't be betting on u.s. stocks. all of that at the top of the hour. carl rkt, see you in about 15. >> thank you, scott. superstorm sandy victims, the fate is unclear as 90 amendments have been filed by friday. one amendment being brought to the floor by mick mull vain knee would cut all discretionary programs by 1.63%. mr. mulvaney is joining us from capitol hill. >> carl, thanks for having me. >> is the future of all aid after a natural disaster now

contingent, in your view, on corresponding cuts? >> i think it is until we get our fiscal house in order. you go back several years and we didn't pay for this. we were actually managing our money fairly well. that is to say, we had deficits probably bigger than some people wanted but they were not a trillion dollars a year. here we are borrowing money to keep the lights on behind me and in that world i think every additional expenditure has to come under some level of discussion as to how we are going to pay for it and that unfortunately includes the sandy relief bill. >> i'm in manhattan where people are upset about the delay of any aid regarding sandy and i'm sure you can imagine they would say, what happens if your home state of south carolina is the one devastated next time? would you feel the same? >> absolutely. let's make perfectly clear. i do live in a hurricane-prone states. i've been through hurricanes and floods. this was not a debate whether

whether or not the government should do it. i'm not in that crowd. i think the government should be doing this. the question is, is it important enough for us to pay for it or are we simply going to move that burden down to our kids? this is not designed to be a delay or a poison pill. it's designed to have a conversation about whether we're going to go to other places to take care of our own people. >> there's already been so much discussion over how long it's taken. for instance, aid to katrina went much quicker than aid to sandy is coming, as if there is any at all. do we need to -- you know how difficult it is to get cuts of any kind. that's going to mean relief for future disasters is going to take longer, isn't it? >> keep many mind, just yesterday on the house floor we passed something by an overwhelmingly bipartisan majority that actually gave the president some additional authority to move things along

faster. i think we're learning from the lessons. i agree that things have gone too slowly. the amendment i'm offering will not offer a delay. it's a discussion about how things get paid. >> finally, we just had gene sperling on talking about the debt ceiling debate. his view was that there are a number of republicans coming armed around to the notion that any kind of ceiling is fe falacious. i can't think that you know that there is anywhere near true. >> i think barack obama agreed with me, the debt ceiling is there for a reason. it forces us to have this discussion. if we didn't have it, we would blow through it like we did for many years. yes, we're doing it differently now. we're talking about the debt ceiling in term of ways to have a discussion and reduce spending. is that different than it has been over the last 30 years? yes, but thankfully so. maybe if we had these discussions for the last 30 years we wouldn't be looking at $6 trillion in debt.

we've done it to ourselves but this is the future and perhaps rightly so until we get things straightened out. >> we'll keep a close eye. thanks for coming to the camera. >> thanks for having me. >> still, the cost of america's crumbling of infrastructure. we're back in a moment. >> announcer: this cnbc program is sponsored by audi, truth in engineering. [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪

the street."

i'm michelle caruso cabrera. a report just came out that shows how costly it is that we don't keep up our roads and waterways. more than $3 trillion off the nation's gdp through 2020. they believe we should be spending $2.7 trillion through the end cht decade. they expect we'll only spend $1.6 trillion. that's a gap of $1.1 trillion in lost sales, 3 1/2 million lost jobs and 3.1 trillion in lost gdp. when the electrical grid fail and you can't run the manufacturing plant, you can't make what you need to sell. when you can't get out of a port, you can't send it you have a we get it it but we need to do something about it. back to you. >> the question is, how do we pay for it. >> exactly. >> thanks, michelle. we are counting down to

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build up to the press event that is about an hour away. what could facebook be building? editor at "the wall street journal," dennis, everyone has had their turn to guess. it's now your turn. what do you think it is? >> i'm going to go with some sort of hand-fisted advertising support tool, marketing enhancement, really kind of boring stuff kind of announcement, carl. i'm sorry. >> why something that it not a little more exciting or a little more direct. >> as julia boorstin reported out, why not livestream this. if this was really a facebook phone or os, you'd want actual images. you'd want to create that type of vibe and momentum. this is going to be a little more low key and for that reason, at least reading from the metafactors, i think it's a little something unexciting. >> interesting, isn't it it, whether it's been intentional or not, they have timed this pretty

well. the stock we know has done well. the flows apparently are coming in from people selling apple. even though that some say facebook is losing its cool factor, there is probably no better time to do this than today. >> no, it's a nice moment. long term getting into searches is a much more exciting opportunity. they have to get it right. if they can steel a few nickels from google, each search query, that is a significant opportunity. and then facebook phone, again, much more difficult to execute that really well. another reason to believe that it's not that, we probably would have heard more chatter out of the developer community, either the smartphone or the software community about that phone. so -- >> imagine all of the components, all of the app developers is a potential source of leak. >> that's why i'm not thinking about that. yes, there are opportunities for facebook. it's a $31 stock. it's trading a 13